Year: 2025
Type: article
Abstract: Convertible bonds are hybrid securities that offer the unique characteristic of being convertible into equity shares of the issuing company at the discretion of the bondholder. This study attempts to explore the features of this hybrid financial instrument with a focus on deposit-money banks’ application of this asset class in corporate finance. This paper explores the potential of convertible bonds as a strategic instrument for the recapitalization of Nigerian banks. Given the evolving financial landscape and the need for robust capital structures, convertible bonds offer a hybrid financing solution that combines the benefits of debt and equity. This study examines the theoretical underpinnings, practical applications, and potential benefits of employing convertible bonds in the Nigerian banking sector or any banking system whatsoever. The findings suggest that convertible bonds can enhance financial stability, provide flexibility in capital management, and align the interests of investors and bank management.
Source: Economic Analysis Letters
DOI: 10.58567/eal04020005
Authors: Oluseun Paseda, Petersen K. Ozili
Institution: University of Ibadan
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4413029123